Republic Services (RSG) is up 9.8% since its last earnings report: Can it continue?

It has been a month since the last earnings report for Republic Services (RSG). Shares gained about 9.8% in that period, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Republic Services due for a decline? Before we dive into how investors and analysts have reacted lately, let’s take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.

Republican Services reported mixed results for the third quarter of 2024, with earnings beating the Zacks Consensus Estimate while revenues came in below.

RSG’s earnings per share, excluding 1 cent from one-time items, of $1.8 beat the Zacks Consensus Estimate by 11.7% and increased 17.5% from the year-ago quarter. Revenue of $4.1 billion slightly missed the consensus mark while rising 6.5% year-over-year.

Sales have grown thanks to innovative technology in RSG’s recycling and waste collection routes, the development of polymer centers and Blue Polymers joint venture facilities, and advances in fleet electrification.

Collections revenue totaled $2.7 billion, up 4.8% from the prior-year quarter and missing our forecast of $2.8 billion.

Revenues (net) in the Transfer and Landfill segments were $211.6 million and $452.8 million, respectively, increasing 2.6% and 3.8% year over year, respectively. Transfer and Landfill segment revenues exceeded our expectations of $207.1 million and $448.5 million, respectively.

Other segment revenue of $205.3 million increased 26.7% from the actual prior-year quarter and exceeded our estimate of $192.3 million. Environmental Solutions revenue (net) of $464.7 million increased 14.8% year-over-year and exceeded our forecast of $451.6 million. The rollover contribution from the acquisitions made in the previous year drove the sales of this segment.

Adjusted EBITDA for the quarter was $1.3 billion, up 13.8% from the year-ago quarter and in line with our estimate. Adjusted EBITDA margin was 32%, up 210 basis points from the prior-year quarter, missing our guidance of 32.7%.

Republic Services exited the third quarter of 2024 with cash and cash equivalents of $83.4 million, compared to $490.6 million at the end of the second quarter of 2024. Long-term debt (net of current maturities) was 12 billion, compared to $11.5 billion at the end of the second quarter of 2024 at the end of the previous quarter.

RSG generated $1 billion in cash from operations in the third quarter of 2024. Adjusted free cash flow was $585.1 million. Capital expenditures were $439.5 million.

The story continues